Washington, June 26 (TIWN) A key US inflation measure closely watched by the Federal Reserve posted its biggest year-on-year increase in May since 1992, indicating rising inflation pressures with the reopening of the economy, the Commerce Department reported .

The so-called core personal consumption expenditure (PCE) price index, the Fed's preferred inflation measure, jumped 3.4 per cent in May from a year ago, the largest 12-month increase since April 1992, Xinhua news agency quoted the Department as saying on Friday.  Including volatile food and energy prices, the headline PCE price index rose 3.9 per cent from a year earlier, the fastest annual pace since August 2008, well above the Fed's inflation target of 2 per cent.  "Many of the increases we are currently seeing will play out as we move into the summer months when the effect of a sharp drop in prices a year ago dissipates. The remainder will intensify debate within the Fed about when to taper asset purchases and hike rates," Diane Swonk, chief economist at Grant Thornton, a major accounting firm, said Friday in a blog.